FLUT Q2 2025: Illinois $0.50 Bet Fee Introduced, Margin Risk Rising
- Product Innovation & Enhanced Customer Experience: The company continues to innovate with features like the "Your Way" platform and enhanced same game parlay capabilities, which are driving strong live betting engagement and positioning FLUT for future market share gains.
- Strong International and iGaming Growth: FLUT's international markets, particularly in Italy, SEA, and Turkey, are showing robust performance and leadership in iGaming, indicating significant expansion potential in underpenetrated markets.
- Effective Marketing Efficiency & Cost Management: The efficient reallocation of marketing spend—with proactive measures to phase investments for upcoming busy periods—and cost-saving initiatives, such as the renegotiation with Boyd, underscore a disciplined approach that supports margin improvements and a bullish outlook.
- Regulatory and Tax Risks: The management highlighted the introduction of a $0.50 fee per bet in Illinois to offset a new tax, and they cautioned that this may not be an isolated event. Such state-led tax measures could recur in other regions, potentially pressuring margins and increasing operating costs.
- Strategic Uncertainty in Prediction Markets: When questioned about prediction markets, management refrained from providing specifics or committing to an approach. This lack of clarity reflects uncertainty in navigating an evolving market, which may pose strategic and execution risks.
- High Costs in New State Launches: Guidance for the Missouri online sports betting launch anticipates an EBITDA loss of around $70,000,000, a figure notably higher than that of some peers. This suggests that the cost structure in new market entries might be more burdensome than expected, impacting profitability.
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US Marketing Efficiency
Q: Benefit from marketing reallocation?
A: Management noted a benefit of £20–£25M from reallocated U.S. marketing spend, helping bolster performance ahead of key NFL and NBA schedules. -
Illinois Surcharge
Q: Is the Illinois fee taxable?
A: They clarified that the $0.50 fee is not assumed to be taxable, serving as a straightforward method to offset rising state costs. -
Platform Migration & Synergies
Q: How will migration boost synergies?
A: The planned H1 2026 migration of SNAI onto the new platform is expected to enhance product integration and unlock previously targeted synergies. -
iGaming Leadership
Q: Are iGaming advantages sustainable?
A: Management stressed that strong innovation, exclusive content, and a robust product roadmap underpin their market-leading position in iGaming, promising durable competitive advantage. -
Missouri Launch Economics
Q: Why are Missouri launch costs high?
A: The anticipated $70M EBITDA loss reflects a consistent cost model of about $35M loss per 1% of the population, fitting their state launch strategy. -
Prediction Markets
Q: What is your view on prediction markets?
A: They are cautiously evaluating the space, leveraging their extensive Betfair experience without committing to any specific investment approach at this time. -
Lottery Tender Impact
Q: Does the lottery tender free up capital?
A: Management indicated that the tender’s outcome frees up capital for disciplined reinvestment, without signaling broader ambitions in lottery products. -
International Performance
Q: Which international markets outperformed?
A: Strong results emerged from Southern Europe, Italy, and Turkey, while mature markets such as Australia maintained steady revenue growth despite some challenges.
Research analysts covering Flutter Entertainment.